Taylor Montana of Coldwell Banker Realty serves homeowners and future homeowners in San Fernando Valley, Central L.A. and the Westside. A Toluca Lake resident and a native Angeleno, Montana provides an insider’s look into the unique neighborhoods that make up the city — their histories, their evolution and where they may be headed next.
Experts believe that we may soon be in a housing bubble due to rising home prices. Do you agree, and what would that mean for homebuyers?
I do not agree that we are in a housing bubble due to rising home prices. Most of the experts that have looked at the historical data agree. There are a number differences between the market we saw leading up to the housing crash in 2008 and the market we see today.
For one, the rise in home prices is being driven by a continued lack of inventory coupled with a large buyer pool. The data shows strong buyer traffic across the country. And while the sharp increase in interest rates during the first quarter of this year placed some entry-level buyers on the sidelines, across the country, buyer traffic hasn’t really slowed. And if we look at the other side of the table, we see extremely weak seller traffic across the country. When we have that kind of strong buyer demand, the lack of sellers keeps the upward pressure on home prices. This is a stark difference from the years leading up to the housing crash when there was an overabundance of homes on the market. Homeowners now also have much more equity built up than they did in the years leading up to the crash. Instead of using their homes as ATMs as they did back then, the majority of homeowners across the country have substantial equity built up in their homes with very few mortgages underwater. In fact, there were far less foreclosures in the last two years than there were before the pandemic began, and this is largely due to government forbearance programs that helped homeowners that were behind their payments get back on solid footing. And beyond that, those who found themselves in a position where they had to sell, were able to come out ahead due to the appreciation of their homes. Finally, lending standards tightened significantly since the housing crash, so most buyers are very qualified to purchase and afford their home. This was certainly not the case during the years leading up to the housing crash, when sub-prime adjustable-rate mortgages were extremely common.
So looking at the data and comparing it to what we’ve seen in the past, the fundamentals do not support the idea that we are in a housing bubble. In fact, most experts agree that we will continue to see appreciation of home values over the next five years, with an average of 6.7% for 2022. While we may see an increase in mortgage rates as high as 6% this year, this is still historically low if we compare to the last 200 years since rates have been tracked. If homebuyers are ready, able and willing to buy, it is still a better time than ever to purchase a home and lock in a rate, especially when we may see rates continue to rise in the future. Even if home prices drop significantly (which I don’t think they will) the rise in rates would erase any savings a consumer might have. And while it’s true that it has become less affordable to buy a home than it was during the last two years, it is still much more affordable to buy now than it was in the years leading up to the crash. But with all of the historical data, and forecasts, the truth is, no one really knows what may happen this year. And anyone that says they know what will happen is being disingenuous. My job as a real estate expert is to advise my clients with the best data I have, and currently, the data shows that we are not in a bubble.
Is now the right time to buy an investment property?
Now is a better time than ever to invest in property. Inflation has been the big story this year, and families have been feeling it hard. They feel it when they fill up at the gas station and when they check out at their local grocery store. And it is likely we will see inflation continue to rise in the short term. The volatility we’ve seen in the stock market is not helping ease these pains. We’ve seen huge swings in the equities markets since the start of the year, and many experts foresee a correction in the best case. So where is the best place to invest in times like these? The answer is, and has historically been, real estate.
How does homeownership protect against inflation?
Homeownership has been one of the best hedges against inflation. And when you’re in an inflationary economy, you want to be invested in hard assets that outperform inflation. This has been true going back to the ’70s. During most decades, home price appreciation has outperformed inflation. It was pretty even in the ’80s, a little bit more in the 2000s due to the housing crisis. But for many of those decades, housing has well outperformed inflation. Investing in property continues to be an excellent performing asset class. In fact, last year, California homeowners averaged a $117K gain in equity, and many experts forecast an average gain of 25% in household wealth based solely on increasing home equity over the next five years.
When it comes to buying a home in the San Fernando and Los Angeles area, what are people looking for these days?
The San Fernando Valley has seen increased activity recently — especially as remote work becomes more commonplace, and safety and security has become a priority. Buyers are looking for more room, not only inside, but outside as well. Flex spaces that can be used as a home office or gym have become coveted in a time when people are spending more time at home and more time with their families. Tight-knit communities and family friendly neighborhoods have become more important to buyers than ever, as families look for places to live that feel safe and secure, and communities that look out for one another.
How do you keep your clients at ease during the stressful home buying and selling experience?
Communication is key. Keeping my clients educated, informed and in the loop on a regular basis eases a lot of the stress that comes during the time leading up to an accepted offer and especially during the ups and downs of an escrow. Being a resource for my clients — answering any and every question they may have — has been essential in ensuring a smooth process. But as anyone who’s been an agent, buyer or seller knows, the unexpected can and will happen. And the more educated and informed my clients are, the more confident they can be during the buying or selling experience.
What is your favorite thing about living in Toluca Lake?
I’ve lived in the Toluca Lake area for most of my life — over 20 years — spending much of my adolescence, from early adulthood through today, hanging around Riverside Drive. As a kid, I enjoyed having weekend breakfasts at Patys with my mom, accompanying my dad to get his morning coffee at Priscilla’s, having my first sushi roll at Nippon (now Kabosu) and burgers at Mo’s (remember Mo’s?). And while I was never old enough to go to the Money Tree, in my early 20s, I had one of my first cocktails at Lucy’s 51. I also had my 25th birthday party at Catcher in the Rye, and yes, I even went to Sardo’s on a Tuesday night (if you know, you know). As I’ve grown, so has our Village. These days, my girlfriend and I might spend an evening having cocktails at Forman’s, eating kimchi biscuits from Hungry Crowd, enjoying happy hour at Yakumi or drooling over the portabella fries at Something Vegan. Everything is my favorite thing about Toluca Lake.
Is there any recent news that you would like to share?
I’ve recently joined the Toluca Lake Chamber of Commerce and am so excited and inspired to be part of such a strong, tight-knit community of business and homeowners that want to see our neighborhood succeed. This year, I had the honor and pleasure to be named a member of the 2021 International Sterling Society at Coldwell Banker Realty — in the top 18% of producers worldwide — as well as Rookie of the Year at my Coldwell Banker Realty branch.